Dont Believe What You Hear About the Budget Talks

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Last week was the point in this year’s budget negotiations when everyone’s worst fears about what would happen seemed to be on the verge of being realized.

The combination of increasingly happy talk about the summit being led by Vice President Joseph Biden and President Barack Obama’s golf outing with Speaker John Boehner (R-Ohio) seemed to have every blogger, pundit and interest group convinced that what they least wanted either was on the verge of happening or had already been agreed to.

If you listened closely, the rumors indicated that everything — from significant tax changes to substantial Social Security cuts — not only was on the table but was coming together in a package that would soon be ready for political prime time and would fly through the legislative process.

This is a routine part of the federal budget debate and the fiscal equivalent of one of the five stages of grief.

I first noticed it during the Andrews Air Force Base budget summit in 1990, when I received a series of calls from people inside and outside the Beltway who could not possibly know what was actually happening.

They all said one side or another in the negotiations had already agreed to the particular spending cut or tax increase they were most worried about.

Although some of those calls were from people who wanted to see whether I could confirm or assuage their fears, most were genuinely convinced that what they had heard or imagined was true.

For the record, my phone started to ring just as the Andrews summit was beginning — that is, while some of the negotiators were making opening statements and others were still trying to find the bathroom. It’s also important to note that virtually none of these “my-budget-sky-is-falling” concerns turned out to be true.

This year’s negotiations have already produced the same type of premature and very likely inaccurate misgivings as typically occur whenever those involved with the federal budget get together to talk about what can, should and needs to be done.

And this year there may be more reason to think that what someone considers a budget nightmare is going to come true given the magnitude of the problem, the few relatively easy deficit reductions that are still available and the paucity of spending and revenue options that numerically and politically are possible. (Note to deficit hawk groups: The formal and ad hoc recommendations you so publicly support are not as novel as you want everyone to believe because they are really little more than what’s available.)

But as is also the case at this stage of the budget negotiations, there are still many reasons to think the fears about budget nightmares are far more imagined than real.

This year, for example, it’s not at all clear that those involved in the budget discussions actually have the authority to negotiate a deal that will be accepted by enough Representatives and Senators to enact the legislation.

The antipathy of the tea party wing of the Republican Party for Boehner and House Majority Leader Eric Cantor (R-Va.) on budget issues has been both stated and demonstrated many times this year.